Indemnity Insurance of Deed of Postponement Mortgage Company conveyancing requirements
Birmingham Midshires and Leeds Building Society, as with the majority of lenders, dictate their own requirements when it comes to deed of postponement indemnity insurance. The purpose of this page to assist property law solicitors on the different lender approved list of panel lawyers where the title to be charged contains deed of postponement. Lawyers are advised to familiarise themselves with the Council of Mortgage Lenders’ handbook requirements for each mortgage company, for example Santander, HSBC or Godiva Mortgages. The content on this page Is not to be read as deed of postponement indemnity insurance advice.
Need help with deed of postponement indemnity insurance from your lender?
Halifax and Barclays as with the majority of banks, obligations require that where deed of postponement indemnity insurance is to be put on risk:
- you must supply a duplicate of the deed of postponement indemnity insurance to the borrower and explain to the borrower why the deed of postponement indemnity insurance policy was effected and that additional insurance might be required if there is supplemental borrowing against the security of the property
- you is required to reveal to the insurer all relevant information which you have gathered
- the minimum level of cover for the policy must satisfy the requirements for the mortgage company (see UK Finance Lenders’ Handbook Part 2 )
- your firm are responsible for approving the terms of the deed of postponement policy on behalf of the mortgage company
- your practice is duty bound to point out to the borrower that the borrower will need to adhere to any conditions of the deed of postponement indemnity insurance policy and that the mortgagor should notify the mortgage company of any notice or potential claim in respect of the insurance
- the deed of postponement indemnity insurance policy must be effected without cost to the bank
- the deed of postponement indemnity insurance policy must not incorporate conditions that you know would void or compromise the interests of the mortgage company
- the deed of postponement indemnity insurance policy must be in favor of the bank and, wherever possible, in favour of the borrower and any next registered proprietor or lender. Where the mortgagor will not be covered by the deed of postponement indemnity insurance policy, the mortgagor should be advised accordingly.
| Lender | Requirement |
|---|---|
| Bank of China | Cover to full value of the property or the Mortgage Advance, whichever is the higher. |
| Bradford & Bingley | Amount of loan + 15% |
| Clydesdale Bank | Open market value of property. |
| DB UK Bank | An amount at least equal to the mortgage advance or credit limit, whichever the higher. The policy must be assignable |
| Danske Bank | The limit of indemnity insurance should be the purchase price or valuation - whichever is higher |
| Furness Building Society | Property valuation or purchase price, whichever the greater. |
| GE Money | GE Money Home Lending has withdrawn from the UK mortgage market. |
| Hodge Equity Release | An amount equal to the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage, the borrower(s) and any successor in Title. |
| Lloyds | The value of the property. |
| Market Harborough Building Society | Purchase price or valuation - higher of the two |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| Mortgage Express (No 2) | [This lender has not published an answer to this question. Please contact the lender.]
|
| Paragon Residential | An amount at least equal to the stated value of the Property. |
| Pepper Money | An amount equal to at least 110% of the purchase price or value, whichever is higher. Any indemnity insurance policy must be for our benefit, that of any transferee/assignee (legal or equitable) of the mortgage and also the borrower(s). |
| State Bank of India UK | The purchase price or value of the property, whichever is the higher. |
| Swansea Building Society | Purchase price or market valuation whichever is the higher |
| Tandem Bank | An amount at least equal to 110% of the purchase price or valuation – whichever is the greater. |
| The Mortgage Works | The full purchase price/value of the property whichever is higher |
| RBS - Direct Line One | An amount equal to the value of the property. |
| Together Personal Finance | Minimum of £2,000,000.00 per claim. |
Deed of Postponement Contingency Insurance : Reflections
The full terms, conditions and exclusions for deed of postponement indemnity insurance are set out in the policy document. Property lawyers are obliged to direct your non-lender client to the deed of postponement indemnity insurance policy itself. Deed of Postponement Contingency insurance is designed to provide indemnity in respect of the risks specified in the policy schedule - so it is essential check the schedule to determine that it is correct. The continuance of this non-investment insurance contract is in perpetuity unless otherwise stated in the deed of postponement indemnity insurance policy. Adequacy in this regard should be checked.Significant features and benefits of deed of postponement Contingency insurance :
The insurance will normally cover where someone claims to be entitled to the benefit of the specified risks, stated in the deed of postponement indemnity insurance schedule. Deed of Postponement indemnity insurance Cover normally includes- Cover for compensation incurred in any proceedings regarding the risks specified in the deed of postponement policy, including solicitors charges.
- All sums paid with consent in writing from the insurance company to free the property from the risks specified in the deed of postponement policy.
- Diminution in value resulting from the successful enforcement of the risks specified in the deed of postponement policy.
- The cost of works (including architects’ and surveyors’ fees) for the purpose of the development started, before the commencement of proceedings for the enforcement of the risks specified in the deed of postponement indemnity insurance, to the extent that such costs are rendered abortive by court order.
- The cost of altering or taking down all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.
- All other costs and expenses incurred by the Insured with the written consent of the relevant insurance company
You also need to be sure that the answers on the application form are accurate. However remote the likelihood of a claim on the mortgage company insurance policy might be you can be sure that the insurer will check the details on any proposal form very carefully prior to any claim being met.
Deed of Postponement Indemnity Insurance has limitations - Other considerations
Deed of Postponement Indemnity policies can provide effective protection, but non-lender clients should be asked to give pause for thought and consider that the consequences of not being able to enjoy the property as anticipated may mean that deed of postponement indemnity cover will not necessarily be the right solution. Content on this webpage is for general information for Regulated law firms in England and Wales on the the lender conveyancing panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the mortgage company indemnity insurance. Whilst we endeavour to keep the information up to date and correct we do not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Lexsure will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
An important exclusion applying to most deed of postponement Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The content set out above is in relation to properties in England and Wales.